Services for the public good shouldn't be expected to make a profit.
Public sector services should not be run with the same shareholder-sating rapacity as corporations, but they should also be held to some standards of efficiency. Subsidies can breed complacency and lead to the stereotypical 'I'm a civil servant who can't be fired mentality' that we all hate. They need not be profitable, but they should incorporate innovation (and employee standards!) to stay competitive.